FMC ISSUES REPORT ON DETENTION, DEMURRAGE AND FREE TIME
Fees are having “negative impact “on the
fair, efficient and reliable movement of ocean cargo, according to a new
report from the Federal Maritime Commission.
Excerpt from American Shipper | By:
Chris Dupin | April 13, 2015
The Federal Maritime Commission has released a
report on detention, demurrage and free time.
The FMC posted a link for the report “Rules,
Rates, and Practices Relating to Detention, Demurrage, and Free Time for
Containerized Imports and Exports Moving Through Selected United States Ports“ on its website.
FMC Chairman Mario Cordero said the agency
“has heard from many importers, exporters, and drayage trucking companies
complaining about demurrage and detention charges that they must pay even
though they cannot timely access their cargo or drop it off before free time
expires.” Last year the FMC held forums on port congestion in Los Angeles,
Baltimore, Charleston and New Orleans.
the Commission has received anecdotal evidence, the industry is encouraged to
submit substantive documentation and information of unreasonable practices
regarding the application of demurrage or detention,” Cordero added.
Demurrage is a charge for the use of space at
a terminal; detention is a charge for the use of equipment such as containers
and chassis; and free time is the grace period for which neither of these
charges will be incurred.
Commissioner William Doyle said FMC “has
identified port congestion and the resulting costs in the form of demurrage
and detention fees on the American shipping public as having a negative
impact on the fair, efficient and reliable movement of ocean-borne commerce
to and from the United States.”
Doyle suggested, “All stakeholders in the
supply chain should read the report and actively engage with each other in
the industry. I look forward to hearing from stakeholders with respect to
their ideas for next steps now that this report has been made public.”
He made a motion and voted in favor of
publicly releasing the report during a closed meeting of the FMC on Monday.
Doyle said the FMC has fielded a number of
complaints from importers, exporters and truckers related to the assessment
of demurrage and detention charges by carriers and marine terminals.
The report reviews the published rules tariffs
of six vessel-operating common carriers at 32 terminals across the United
States, and reveals that average total prices for both demurrage and
detention may be higher for importers than exporters, higher for demurrage
than detention, and that both charges appear similar across all ports, except
for New York/New Jersey, where they are much higher on average.
appears that VOCCs (vessel operating common carriers), rather than MTOs
(marine terminal operators), generally control these prices and policies
affecting importers and exporters directly. The demurrage and detention rates
for the VOCCs whose tariffs were studied vary somewhat depending on port and
terminal, but the terminology and application of charges with similar
names are distinct across these VOCCs, making direct comparisons difficult.”
Doyle noted the charges are for “delays out of
the control of importers, exporters and truckers and widely viewed by the
affected parties as unfair.”
He said the report highlights the assessment
of fees in connection with port congestion and the resulting increased costs
for shippers and truckers, and details possible actions that carriers,
terminal operators and port authorities can take to help minimize congestion
and attendant demurrage and detention fees.
He said the report also “notes possible
actions that beneficial cargo owners and truckers may take such as requesting
informal mediation and administrative or court action.”
FMC could take a wide variety of actions, such
as investigating whether there has been discrimination, unreasonable
practices, or anti-competitive practices and possibly initiating an
adjudicatory proceeding against a vessel carrier or terminal operator if
found to be in violation of the Shipping Act.
The FMC also has the ability to order shipping
lines to file reports related to their business or could require lines or
terminal operators to submit additional data related to demurrage, detention,
and free time issues involved in agreements filed with the FMC.
Doyle noted the public may file petitions with
the FMC seeking relief or affirmative action by the Commission.
Maritime Commission, FMC
Our regulatory experts are monitoring
the situation and keeping a close eye on labor negotiations, which began on
May 12, 2014. In the meantime we are checking shipment status on a
daily/hourly basis to see where our client’s cargo stands in movement towards
its final destination. While we can’t control the situation we can keep you
contained in this newsletter has been compiled from various industry
newsletters and other public sources. While we use reasonable efforts to
furnish accurate and up-to-date information Page & Jones, Inc. is not
liable or responsible for the accuracy or reliability of any information